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REP O RT
Shared Modular Build of Warships
How a Shared Build Can
Support Future Shipbuilding
Laurence Smallman
•
Hanlin Tang
•
John F. Schank
Prepared for the United States Navy
Approved for public release; distribution unlimited
NATIONAL DEFENSE RESEA R C H I N ST I T UT E
•
Stephanie Pezard
The research described in this report was prepared for the United States Navy. The research
was conducted within the RAND National Defense Research Institute, a federally funded
research and development center sponsored by the Office of the Secretary of Defense, the
Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense
agencies, and the defense Intelligence Community under Contract W74V8H-06-C-0002.
Library of Congress Control Number: 2011924089
ISBN: 978-0-8330-5148-6
The R AND Corporation is a nonprofit institution that helps improve policy and
decisionmaking through research and analysis. RAND’s publications do not necessarily
reflect the opinions of its research clients and sponsors.
R® is a registered trademark.
Cover photo by DCNS: The bow section of the Mistral is brought into position with the stern section in
Brest, France, July 2004.
© Copyright 2011 RAND Corporation
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Summary
Why would a warship program follow a multiple-yard, modular-build strategy? And how might
such a program be managed to deliver those warships? This report sets out to answer these
questions by considering the theoretical cost advantages, benefits, and challenges of building
warships in modules at multiple yards with final assembly at a single shipyard: the shared-build
approach. The basis for this analysis is the case studies of recent shared-build warship programs
in the United States, France, and the United Kingdom (UK). We do not prescribe specific steps
to take; rather, we draw out key points and themes from the case studies and analyze these. In
this way, decision makers and future program managers can draw on the experiences of others
who might have faced similar challenges.
There are three circumstances under which a multiple-shipyard, modular-build strategy
might be adopted: A customer might specify the requirement; a prime-contracting shipyard
might plan to outsource elements of construction; or an event in a build shipyard might lead
to unplanned outsourcing of some of the work. Shared build might be required for political
reasons, such as to provide work to more than one geographic region or maintain a shipbuilding industrial base, or it might be needed to access skills available only at different shipyards or
to overcome capacity constraints. In some circumstances, it might be hoped that shared build
could reduce costs.
The case studies are used to investigate such factors, and we use these to describe the
key elements that decision makers might wish to consider as they contemplate the available
strategies for delivering a class of warship. It might be that lawmakers direct the requirement
for sharing build to maintain work and support an industrial base. Program managers and
the potential shipyards will want to carefully plan the workload allocations to deliver the vessels within budget. Choices will need to be made about the contractual structure that will
best meet the program’s needs, and those involved will need to consider how they will work
together, both in design and production, so that their collaboration helps and does not hinder
the program. Table S.1 summarizes the attributes of the different shared- or modular-build
cases.
There are no irresolvable technical obstacles to a shared-build strategy. Although shared
build can work, it might not always deliver the outcome expected when the decision to adopt it
is first made. For example, it might not maintain skills at all shipyards equally. Also, there are
likely to be extra costs associated with such duplicated capability if hull numbers and drumbeat are not carefully managed.1 Further, it is not clear that shared build is an effective means
of preserving competition. This is because success in a shared-build program, particularly for
1
Drumbeat is the build-schedule periodicity and is usually measured by the start of construction of each hull.
xi
xii
Characteristic
Number of units
Virginia Class
DDG-1000
LPD-17
DDG-51 Deckhouse
Type 45
QEC
Mistral Class
30
3
9
1
6
2
3
Choice of shared
build
Maintain industrial
base
Access specialist
skills
Event-constrained
capacity
Event-constrained
capacity
Capability
constraints
Ring construction;
sustain two
yards’ ability to
integrate and
deliver alternate
assembly and
delivery, alternate
construction of
nuclear reactor,
and split rest of
modules evenly
Composite
deckhouse to
NGSB-GC; rest to
BIW
Reduced capability Build yard had no
(loss of labor and “spare” deckhouse
facilities) after
modules; use
Hurricane Katrina; deckhouse already
outsource some
being built in BIW
steel work and
minor outfitting to
small companies
Contractual
arrangements
Intimate teaming,
prime-sub
GFE
Prime-sub
Design software
and IT
Shared design
system, separate
business systems
Shared design
systems
Cost implications
Transportation
costs; IT
infrastructure
costs; additional
design-translation
cost
Transportation
costs; IT
infrastructure costs
for common data
systems
Maintain industrial Overcome capacity
base
restrictions
Overcome capacity
restrictions and
reduce costs
N/A; distribute
work to minimize
cost
QEC project too
large for single
shipyard; distribute
work to minimize
cost
DCN yard could
not build whole
ship. Chantiers de
l’Atlantique yard
is skilled at largeaccommodation
construction: living
spaces to Chantiers;
combat systems
and other military
functions to DCN;
some outsourcing of
DCN steel work to
Polish yard
GFE
Prime-sub
Alliance
Prime-sub
N/A
N/A
Separate design
systems
Shared data
warehouse, two
separate design
systems
Separate
Transportation
costs
Transportation
costs
Transportation
costs
Transportation
costs; IT
infrastructure
costs;
infrastructuremodification costs
Transportation costs
Shared Modular Build of Warships: How a Shared Build Can Support Future Shipbuilding
Table S.1
Characteristics of Shared-Build Programs Studied
Table S.1—Continued
Characteristic
Shipyard
collaboration
Virginia Class
Extensive
collaboration
at all levels of
management and
production
DDG-1000
Integration-yard
QA personnel at
supply yards
LPD-17
Minimal
collaboration
DDG-51 Deckhouse
Some collaboration
Type 45
Integration-yard
QA personnel at
supply yard
QEC
Fully integrated
program
management;
integration-yard
QA personnel at
supply yard
Mistral Class
None
NOTE: DDG-1000 = Zumwalt-class destroyer. LPD-17 = San Antonio–class dock. DDG-51 = Arleigh Burke–class destroyer. Type 45 = Daring-class destroyer (UK).
QEC = Queen Elizabeth–class aircraft carrier. NGSB-GC = Northrop Grumman Shipbuilding—Gulf Coast. BIW = Bath Iron Works. DCN = Direction des Constructions
Navales. GFE = government-furnished equipment. IT = information technology. QA = quality assurance.
Summary
xiii
xiv
Shared Modular Build of Warships: How a Shared Build Can Support Future Shipbuilding
complex vessels, requires the cooperating shipyards to set aside any competitive tendencies and
help each other to the overall benefit of the program. The prospect of future competition will
inhibit such a process, as was seen in the early stages of the UK’s Type 45 program. Conversely,
shipyards in a successful shared-build program seem keen to remain in such a structure for
subsequent work. The teaming arrangement delivering the Virginia-class submarines reinforces
this observation; the UK’s alliance structure for delivering the future carriers evolved from
multiple shipyards via a joint venture to a single shipyard. We conclude that the government
(or Navy) needs to decide what it wants from a shared-build strategy before embarking on it.
Once a decision is made, the program manager must then monitor and manage the program
to ensure that it delivers the required outcome, as well as the vessels called for in the program.
Although our case studies do not allow direct comparison between different programs,
we group our findings into four areas in which risk reduction is important. Reducing risk will
give greater assurance that a program can deliver the required vessels, that they will be delivered on time, that they will be of the required quality, and that the program will meet its cost
targets. Our four risk reduction areas are as follows:
• Motivating cooperation. Contractual requirements are only the first stage of cooperation
between shared-build shipyards. For the more-complex warships, a higher level of trust
and openness is needed between the involved shipyards. This can be difficult when there
is an underlying and continuing shipbuilding competition. Strong collaboration can lead
to shared best practices and reduced costs. The government (or Navy) has a role to play in
bringing shared-build yards together and can encourage cooperation with, for example,
contracting structures and profit share.
• Design completion. Detailed design is a key step in mitigating rework requirements
during module integration because it allows better quality control and ensures accurate
and timely stock delivery to the production process. This becomes even more important
when those modules are to be built at two or more locations. In particular, the design at
the module interfaces needs to be fully understood and, therefore, practically complete
for modules to integrate easily and at less cost.
• Design and design-to-production organization. Shipyards involved in a shared-build
strategy need to reach a detailed and common understanding of what affects the module
interfaces and their integration. Such commonality requires either common design software or compatible software linked to a common design data bank.
• Aligning production practices and schedules. Aligning production practices requires each
yard—in particular, the integration yard—to understand differences in production processes. This is of vital importance at the interfaces of complex, outfitted modules. Aligning the production schedules also requires pacing module construction to the same completion drumbeat.
A failure in the earlier stages of this progression is more likely to be catastrophic to the
program than is a failure later on. The importance of these risk-reduction areas increases with
the complexity of the modular-build process, which, in turn, is linked to the complexity of the
vessel to be built. In other words, shared-build risks are likely much higher for more-complex
vessels than are traditional-build risks of such vessels.
Summary
xv
These risks could lead to increased program costs apportioned according to the shared
management structure and contractual requirements. There is a further set of costs linked
directly to the shared-build decision. The key shared-build costs are as follows:
• Demarcation of block completion. Shared build places a requirement for the supplying
and receiving yards to agree on the completeness or otherwise of the supplied blocks. To
mitigate the impact of unfinished or late blocks and to reduce overall program costs, both
yards will endeavor to monitor and agree block progress. Such steps will add costs.
• Design for transportation. Structural and stability requirements to allow for open-ocean
transport of blocks will increase design and production costs.
• Transportation. Moving completed modules from the supplying yard to the integration
yard will add cost to the program.
• IT infrastructure. Especially in shipyards with very different IT systems, linking those
systems or adopting a uniform system is a necessary cost.
• Resource management. Block build places particular demands on build manning with,
for example, a block move coinciding with peak manning. The facilities in the yards
are similarly affected. Shared build might require specific investment in delivering- and
receiving-yard facilities to allow transfer of the modules.
The potential benefits to the cost of a program that follows a shared-build strategy include
the following:
• Maximizing the learning curve. A shared-build strategy, in which the same modules are
fabricated at the same yard for a relatively small number of hulls, can offer more opportunities to derive learning-curve efficiencies than an alternating, whole-hull schedule
would offer.
• Cross-yard learning. In some circumstances, such as the Virginia-class program, the sharing of lessons learned and the collective innovation of more-efficient processes can reduce
cost. In the case of the Virginia class, the motivation for cross-yard learning was underpinned by the agreement for equal share of profit.
• Outsourcing benefits. Assigning modules to shipyards with a specific specialization or
lower manpower costs can lower the costs of an overall program. For example, the French
Mistral class achieved cost reduction by outsourcing some steel work to a less costly Polish
yard and by assigning the habitability modules to Chantiers. Assigning specific modules
to specialized shipyards to reduce cost needs to be carefully balanced against other build
strategy goals, such as the desire to maintain specialized skills at both shipyards. As seen
in the Mistral class, outsourcing can also relieve existing or emerging capacity problems
in the primary yards and keep a project on schedule, thereby avoiding any penalties for
late delivery.